Greg Moriarty, secretary of the Defence Department, also warned Australia must become more active in statecraft and project optimism or accept having its place in the world shaped by China.

Supply chain risks for essential goods skyrocketed in public concern during the pandemic, while 'drums of war' and China's military posturing were broadcast into homes when proclaimed last year by former defence minister Peter Dutton and senior official Mike Pezzullo.

How the public first learns about threats facing the nation came with its own risks, Mr Moriarty told a panel discussion on Wednesday.

"Things come along which jolt the consciousness of the public and there's almost a pendulum swing that goes from complacency to very stark anxieties," he told public servants at the IPAA national conference.

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He said ministers should be regularly talking to the public about the opportunities the nation faces along with the challenges.

The public sector had an appropriate role to assist ministers with those conversations and "occasionally for the public sector to have its own voice on some of those issues," he said.

"A proper conversation with people helps to build awareness rather than causes either anxiety or complacency."

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The Labor government was "clear eyed" that Australia entering a more challenging era, in which its statecraft would be tested, he said. This would involve a greater role for Australian industry, the education sector and government departments that don't think of themselves as diplomats to share the country's creativity and resilience.

He said an "economic decoupling is likely" in some sectors between China and countries that partner with the United States.

"The world is not as we would like it, and we have an obligation to shape that in a positive way - that serves our interests."